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Note 15 - Regulatory Capital
 12 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Regulatory Capital Requirements under Banking Regulations [Text Block]

NOTE 15 – REGULATORY CAPITAL

 

The Bank is subject to various regulatory capital requirements administered by the Federal Reserve and the FDIC. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines of the regulatory framework for prompt corrective action, the Bank must meet specific capital adequacy guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital classification is also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

 

Under capital adequacy guidelines of the regulatory framework for prompt corrective action, quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of Tier 1 capital (as defined in the regulations) to total average assets (as defined), and minimum ratios of Tier 1 total capital (as defined) and common equity Tier 1 (“CET 1”) capital to risk-weighted assets (as defined).

 

The Bank must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage, and CET 1 capital ratios as set forth in the table below to be categorized as "well capitalized". At December 31, 2024, the Bank was categorized as “well capitalized” under applicable regulatory requirements. There are no conditions or events since that notification that management believes have changed the Bank’s category. Management believes, at December 31, 2024, that the Bank met all capital adequacy requirements.

 

The following table compares the Bank’s actual capital amounts and ratios at December 31, 2024 to their minimum regulatory capital requirements and well capitalized regulatory capital at that date:

 

                 

To be Well Capitalized

            

For Capital

 

Under Prompt

       

For Capital

 

Adequacy With

 

Corrective

  

Actual

 

Adequacy Purposes

 

Capital Buffer

 

Action Provisions

Bank Only

 

Amount

 

Ratio

 

Amount

 

Ratio

 

Amount

 

Ratio

 

Amount

 

Ratio

At December 31, 2024

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total risk-based capital (to risk-weighted assets)

 

$

368,953

 

14.18%

 

$

208,174

 

8.00%

 

$

273,228

 

10.50%

 

$

260,218

 

10.00%

Tier 1 risk-based capital (to risk-weighted assets)

 

$

336,416

 

12.93%

 

$

156,131

 

6.00%

 

$

221,185

 

8.50%

 

$

208,174

 

8.00%

Tier 1 leverage capital (to average assets)

 

$

336,416

 

11.24%

 

$

119,741

 

4.00%

 

$

N/A

 

N/A

 

$

149,676

 

5.00%

CET 1 capital (to risk-weighted assets)

 

$

336,416

 

12.93%

 

$

117,098

 

4.50%

 

$

182,152

 

7.00%

 

$

169,141

 

6.50%

                     

At December 31, 2023

  

 

 

 

  

 

 

 

  

 

 

 

  

 

 

 

Total risk-based capital (to risk-weighted assets)

 

$

339,436

 

13.37%

 

$

203,094

 

8.00%

 

$

266,561

 

10.50%

 

$

253,868

 

10.00%

Tier 1 risk-based capital (to risk-weighted assets)

 

$

307,686

 

12.12%

 

$

152,321

 

6.00%

 

$

215,787

 

8.50%

 

$

203,094

 

8.00%

Tier 1 leverage capital (to average assets)

 

$

307,686

 

10.39%

 

$

118,488

 

4.00%

 

$

N/A

 

N/A

 

$

148,109

 

5.00%

CET 1 capital (to risk-weighted assets)

 

$

307,686

 

12.12%

 

$

114,240

 

4.50%

 

$

177,707

 

7.00%

 

$

165,014

 

6.50%

 

In addition to the minimum CET 1, Tier 1, total capital, and leverage ratios, the Bank is required to maintain a capital conservation buffer consisting of additional CET 1 capital greater than 2.5% of risk-weighted assets above the required minimum levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses based on percentages of eligible retained income that could be utilized for such actions. At December 31, 2024, the Bank’s capital exceeded the conservation buffer.

 

The Company is a bank holding company registered with the Federal Reserve. Bank holding companies are subject to capital adequacy requirements of the Federal Reserve under the Bank Holding Company Act of 1956, as amended, and the regulations of the Federal Reserve. Bank holding companies with less than $3.0 billion in assets are generally not subject to compliance with the Federal Reserve’s capital regulations, which are generally the same as the capital regulations applicable to the Bank. A bank holding company that crosses the $3.0 billion total consolidated assets threshold as of June 30 of a particular year is no longer permitted to file reports as a small holding company beginning the following March. As the Company was under $3.0 billion in assets as of June 30, 2024, the Company was still considered a small holding company as of December 31, 2024 despite total assets exceeding $3.0 billion at year end.  The Federal Reserve has a policy that a bank holding company is required to serve as a source of financial and managerial strength to the holding company’s subsidiary bank and expects the holding company’s subsidiary bank to be “well capitalized” under the prompt corrective action regulations. 

 

The following table presents the Company's regulatory capital ratios at the dates indicated: 

 

  

At December 31,

 

Company Only

 

2024

  

2023

 

Total risk-based capital (to risk-weighted assets)

  14.53%  13.73%

Tier 1 risk-based capital (to risk-weighted assets)

  11.36%  10.51%

Tier 1 leverage capital (to average assets)

  9.87%  9.01%

CET 1 capital (to risk-weighted assets)

  11.36%  10.51%